Oil has had a profound impact on the world civilization than any other single natural resource. It is the principle energy source sustaining our civilization and economy in the world. Currently, oil is among the world’s most important natural resource, without it, the world would not function as effective and as efficient as it does today (Science Classified 2008). “Oil has become a very decisive element in defining the politics, rhetoric and diplomacy of states” (Agbebi 2009, p. ). Economically, oil plays a huge part in international trade since all countries need it but not all countries are ble to produce it. However, oil is a finite resource and someday it will run out Oamall 2012). The point in time at which the supply of oil is at its limit is known as peak oil. After this point, oil supply will begin to decline (Ecomii 2012). Based on the reserve estimates from OPEC, peak is expected to be around 2030 (World in Motion 2010).
When the time comes where there is a depletion of world oil, consequences will arise, not only at a domestic level but also on a global scale. Therefore, it is important that we begin to come up with alternatives for this valuable source therwise we will struggle to maintain our current lifestyles. Crude Oil is the most traded commodity in the world (Shah 2011). There is an increasing demand for oil and this will not change anytime soon. It’s function and significance around the world is enormous and simply, the world could not function as it does today without the resource. Oil touches nearly every single aspect of the lives of those in the industrialised world. Most of our food, clothing, electronics, hygiene products and transportation simply would not exist without this resource” Oamall 2012, Para. 1). Petroleum is the most critical energy resource for modern economies, supplying about 40% of the world’s primary energy and nearly all of the fuel for the world’s transportation systems” (Greene, Hopson & Li 2006, p. 515). Products produced with oil such as plastic would become scarce and expensive when peak oil hits.
Oil also fuels most transportation worldwide and is also used in pharmaceuticals, agriculture and a myriad of other products used in everyday life such as plastic, asphalt and fertilizers (Hirsch 2005). Businesses and farms that rely on oil for day-to-day operations to make these products can no longer operate. The transportation of their stock that they so dependently rely on can no longer be delivered. Factories that manufacture some of world’s most important materials such as plastic, tyres, nylon and rayon can no longer make these products (Maring 2012).
Many factories and business will therefore have to close down, as they cannot operate without oil. There is no doubt that the world would change vastly and rapid without oil, not only to the economy but our lifestyle and living standards would be hugely impacted. “Oil is vital to the world economy and the world consumption of oil, driven by countries uch as India and China, is set to rise significantly’ (Hathaway 2009, Para. 1). “According to the EIA, the world currently consumes 85. 4 million barrels of crude oil daily – roughly equivalent to every single person on the planet using 2 litres of oil a day. With the current market prices ofa barrel of oil being $51, global consumption of oil costs $4. 3 billion every single day, or 62 cents for every person” (Hathway 2009, Para. 1). This is evident in that oil giants such as Exxon Mobile, BP, Total and Royal Dutcn Snell generate more pront tnan most otner companies In tne world year In year out (Hathaway 2009).
On the Fortune Global 500 rankings, six of the top ten biggest companies based on revenue are all of the oil and gas industry (CNN Money 2011). This is Just the ever-increasing demand of oil from all over the world and that every nation needs requires this valuable resource. Without oil, these companies would shut down, causing a huge global financial crisis in the world economy Oammall 2012). And without these companies, the cash flow in world trading would worsen due to the part these companies’ plays. This goes to demonstrate how big of an impact oil has on the world economy and the international trade.